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SE Asia PP uptrend fueled by China’s strong return

by Merve Sezgün -
  • 14/10/2021 (03:10)
The uptrend in Southeast Asia’s PP markets has gained momentum, drawing strength from the bullish post-holiday sentiment in China. Both import and local markets across the region have seen notable hikes so far this week amid tight supplies, strong upstream costs and recovering demand with easing Covid-19 restrictions.

“Supply from the Middle East was already limited due to container shortages coupled with sellers’ preference to sell to other markets offering better netbacks. Shutdowns and reduced operating rates at many coal-based PP plants in China amid the dual control policy have also meant reduced imports into Southeast Asia, exacerbating the tightness in the region. As a result, PP has seen rapid hikes recently,” explained traders.

Import prices jump 13% from a month ago

According to ChemOrbis Price Index, homo-PP raffia and PP block copolymer injection prices on CIF Southeast Asia basis have extended their gains into the fourth consecutive week. The markets have jumped around 13% since the uptrend kicked off, with the largest increases posted in the current week.

Mid-Eastern PP raffia breaks above $1300 CIF

Buyers in Vietnam reported that they received a limited number of Middle Eastern PP raffia offers with sizable hikes from last week at around $1320-1350/ton CIF, cash.

ChemOrbis data reveal that prices for this particular origin have broken above the $1300/ton CIF threshold for the first time since late April.

A Vietnamese converter commented, “Prices have increased almost $100/ton this week. But we are not planning to purchase at the moment as the market has risen too sharply.

We may delay our replenishment to around December when the uptrend might cool off.”
Homo-PP raffia offers for all origins currently stand at $1320-1430/ton CIF SEA, cash, up by around $60-80/ton from last week, meanwhile.

Local markets follow suit

PP prices within the region’s local markets have also witnessed a fresh round of hikes lately due to tighter import supplies amid delayed shipments and high freight costs.

On Monday, an Indonesian producer notified fresh upward revisions of its polyolefin offers to local buyers, in its eighth hike for PE and the sixth hike for PP since October 4. The country’s local homo-PP market reached its highest level since early May following the latest round of price hikes.

In Vietnam, the local homo-PP raffia market increased for the fifth straight week, with prices rising VND500,000-1,000,000/ton ($22-44/ton) from last week. Nghi Son Refinery and Petrochemical (NSRP) unexpectedly shut its 400,000 tons/year PP plant on October 7 while the plant is currently running at reduced rates due to technical issues. Players expect this to tighten PP supplies in the country and keep prices firm.

Players in Thailand, the Philippines, and Malaysia also reported higher local PP prices, attributing the latest hikes to a series of factors including rising import offers, tighter supplies, better demand sentiment, and higher costs.

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